So I got a $310 haircut. I learned 3 SURPRISING things about raising your prices. You’ll love #2.

by Derek Halpern | Follow Him on Twitter Here

310 haircut

So I got a $310 haircut.

I know. RIDICULOUS!

But here’s the deal:

The BEST way for a business owner to increase profits is to charge a higher price for what they sell.

But people struggle with this…

They say:

“Why would someone pay me more when they can go somewhere else for less?”

“I’m worried that people won’t buy if I increase the price.”

“But I’m not comfortable charging more…”

And that’s why I got a $310 haircut.

You see, there are plenty of people who will cut my hair – and they’ll do it well – for 10, 20, or 50 bucks.

And I wanted to see what made a $310 haircut different. I wanted to see how he could charge so much more for something that has a TON of low-priced competition.

I learned a lot and I reveal it all in this new video.

Now go watch the video. Then when you’re done, tell me about a time when you splurged on something. What did you learn about high-end experiences?

Note: To people asking, the hair stylist is Jordan Blackmore.

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{ 204 comments… read them below or add one }

Brock

Nice haircut.

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Derek Halpern

Ha, thanks.

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Alejandra Ruani

Time to change your sidebar About Derek Halpern photo. Nice edgy cut!

Curious, what’s the name of this studio???

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aure

@Alejandra – I had the same idea, that photo needs to be changed.

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Hannah Ransom

Your hair does look a lot better!

One of my splurges was getting a vitamix instead of a crappy blender. Worth it and they have awesome customer service.

I usually try to buy high quality and low amounts of stuff rather than lots of crap.

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Derek Halpern

Vitamix is AMAZING.

Tell me a bad blender story ;-)

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Kirk

Great Video Derek and you are so right Hannah — Vitamix is awesome! That was my spurge as well and once you mix with a Vitamix you ain’t never going back!

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Michele Rosenthal

Derek — Great vid with many interesting points. Here’s my question: I know you’re going back for your touch up, but then are you planning on getting a $310 haircut every month when it isn’t for research?

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Derek

Think about your question for a second. Is there a right way for me to answer it?

If I say no, people will say “see that will never work. It will be hard to build repeat business.” And they’ll never think that raising prices attracts a different quality if customer. They’ll keep catering to bottom of the barrel people.

If I say yes, I’m going to go every month, people will complain about how it’s a big waste of money that could easily feed a family for a week.

That said? Will I go back? Yes.

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Amy

Stayed at the Mandarin Oriental instead of a less expensive hotel. Wow! What an amazing place. It was luxurious in every way imaginable. The service was excellent, quiet and professional. The bed was the best bed I’ve ever slept on. Can’t wait to get one for my home! The tub was deep and relaxing. I would go back in a heartbeat.

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Craig

Just split the difference and say “YO.” Then you can go back every 2 months.

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Megan

Hotels are easily my favorite thing to splurge on. They can often times make all the difference in the quality of a vacation or travel venture.

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Cyndi

Yay! As a stylist, I love hearing you are going back : )

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Meagan

ok, random of all random, but, a friend of mine use to cut hair for a living, we were talking about prices you charge, and how you get what you pay for. Case in point: She talked about working in a salon that charged $15 and then about a salon that charged $10 (this was back in the 90s in Utah, most people cut their own hair, they don’t pay to have it cut ;) and how at $15 she had to do less haircuts to get the same amount of money but that the people came in were of a higher class than the people who went to the $10 haircut place, the place for $10 didn’t include the cost of shampoo and how sometimes it was like the person hadn’t washed their hair in weeks and she would throw it in for free simply because she couldn’t cut it without washing it first but they refused to pay the extra for the wash (meaning she was doing even more for less).

now, as for the $15 haircuts, the people were using clean and orderly and didn’t stink, they paid promptly, didn’t complain to get a refund (and solely to get a refund) and they kept things civil and for that reason she would never charge less than $15

by the way, she also charged $5 for a wax, but you could get it for $2 at walmart, well, I went for the cheaper wax 3 different places and I got seabreeze poured into my eyes at one, 2nd degree burns from another, can’t remember exactly what the 3rd place did, but I have a feeling it had something to do with her big loud ‘oops’ as she ripped it away and what appeared to be absent eyebrows when I left……..me and said friend live in different states, for the last 5 years she has been the only one allowed to wax my eyebrows, yes, I travel from east Texas to Utah knowing while there I will get my eyebrows waxed

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Emanuel

Indeed, your hair look great!

Great tipps man – so happy I subscribed.
You always deliver great quality.

Be safe,
Emanuel

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Derek Halpern

Glad you dig it Emanuel.

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Rosalee

Looks good Derek. I’m curious, will you go back each month? Was it that good?

I like to splurge, but my expectations go up tremendously and it suck to splurge on something that falls below expectations. I say if you charge the big bucks you had better deliver. Sounds like this hair studio did just that.

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Anna

Nice hair cut, and great advice! Thank you :)

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Leslie Samuel

So, I’ve never left a comment on your blog before, so what I’m about to say is very important and adds a significant amount of value to the ongoing conversation here. Make sure to read this one . . .

Dude, your hair looks good! (No homo)

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Derek Halpern

is this really your first comment?

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Designer Rob Russo

Ha!

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Leslie Samuel

Haha, I don’t know. Maybe it wasn’t the first. Couldn’t remember if I’d commented before. Seemed like the thing to say at the time. Hey, it was funny in my head ;)

Hope all is well bro. Peace!

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jennifer

You made me laugh. Nothing against homosexuality, but your “no-homo” comment was a chuckle maker. It took me bad to 8th grade.

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Geeta

I certainly agree with several of the points you made. What I wonder is: are you going to go back to this guy? For sure sometimes a high price or something outrageously different will attract novelty shoppers, but are you SERIOUSLY going to go back and spend $310 a month when you’ve been getting a pretty decent haircut for $40? Curious.

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Derek Halpern

I was talking to the guy about just that. And he was telling me how some clients go once or twice a year. They save up for it and treat themselves.

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Parul

I have long hair which go below my waist and am in no mood to shorten them up. One of the biggest reason it is too tiring for me to sit still in a chair while the hairdresser goes about his/her job. That said its not THIS expensive in India.

I can totally relate to this I save up to buy a higher brand or an expensive vacation.

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Harshal

When people are charged more for something like haircuts or clothes it makes them feel better/confident when they purchase that item. It’s a mental thing for a lot of people. And to satisfy that inner feeling they will keep buying more of it. One example is $300 jeans. Are they really that better??

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Julie

Once for my birthday, I splurged on the nicest spa in town. I had been to other places for massage, and it was “ok”. This place…..wow.

Personal 8-head shower room prior to the massage, then a light meal and cucumber water in this heaven-like waiting area in a plus robe. Then during the massage the masseuse was perfect at sensing when more or less pressure was needed. The atmosphere was kept quiet and relaxing and even though you are basically parading around with naught but a robe, I never felt exposed.

While it was about 300% more expensive than other massages, it was definitely worth it. Instead of 30 minutes of “ok”, I got three hours of awesome.

Thanks for the reminder! We are going through a price increase currently, and about to order new uniforms for our consultants. I think we will upgrade our look with our price.

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BT

I get the concept of this wholeheartedly, but what about the issue of frequently returning customers? Will you now spend this much every time you want a cut, or will it be a once in a while type of luxury. If the latter is the case, how would the business build loyalty and client base?

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Derek Halpern

Here’s the deal:

You’re not supposed to cater to everyone. When you charge higher prices like this, you attract a certain demographic of people. People who don’t mind spending money.

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Sarah Jordan

Love the funny screenshot. That was a great video and just what I needed to hear right now. Nice haircut!

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Craig

What you’ve dissected in this video is a big pain point for a lot of small businesses and I thank you for that. A dapper haircut and experience for over $300+? I love that you walked the walk by investing in this experience in order to provide YOUR audience with amazing value! My only regret is that you didn’t work the phrase “neither here nor hair” into your video but that’s just how MY brain works. :) Keep up the great work! – Craig from Modernpreneur.

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Shana Lynn Yao

Hey Derek – my neighbor cuts hair out of her apartment. A few years ago she decided to “step up her game”. She spent time decorating her place, and just raised her $90 rate to $400. She suddenly started to get some bigger clients and now her business is booming – and from her apt no less!

The more you believe in yourself and really connect with who you are, the more successful you will be. Seems to be the mark of all successful entrpreneurs – you, Laura Roeder, ramit sethi, etc

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The Redhead Riter

I actually think this is one of your best videos. Way to go!

I believe in splurging on myself because I am only going to live once! I make a point of pampering myself whenever possible even if I have to do it myself instead of paying someone to do it. Things like exotic recipes, facials, manicures, pedicures, massages, day trips…The experiences are always GREAT! They invigorate me and reaffirm that I am SPECIAL and can do ANYTHING if I work hard and stay focused.

Oh, about the hair cut. You need to turn all the way around so I can see the back of your head!!!! From what I can see, it looks great ;)

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Laura

First of all, you look great! Love the hair cut!
Second, I’m sooooo thankful you posted this video! I have been struggling for over a year now with the same problem. In my business, I combine massage therapy and life coaching- I call it ‘Body-Mind Coaching’. The thing is, I built my business as a massage therapist and my clients still refer me as a massage therapist. It’s not to say I don’t include massage as part of my service. But, I’m also spending 30mins-1 hour extra with my clients talking to them about what patterns & habits they are stuck in and how it has translated into the issues they feel in their body (the coaching part).
I get great results with my clients. I have been able to build an amazing practice where I am typically booked in a 3-4 weeks in advanced. However, I feel like I’m offering my clients so much more but only getting paid as a massage therapist (I am on the high end for my area, thank God).
I have taken ‘massage’ off my website and only promote myself as a Body-Mind Coach there. Where I get stuck is with my existing clients. How can I change their language so they are really aware that I’m more than just a massage therapist? Since I get a huge number of referrals, it is essential that I do this for the future of my business.
I’d love any thoughts to make this transition effectively. Thanks a bunch… you are totally awesome. Your posts are ALWAYS super helpful! -Laura

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Dana

I hope he answers your question! You left *me* curious.

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Rachel

You can do it fairly easily if you do two things:

1) Explain to your clients that you’ve upgraded your services, and now you offer “Body-Mind Coaching.” Be clear about what that means for your clients, by making sure you have a good elevator speech ready.

Send out a letter or brochure “launching” your new service to your present clients before you start advertising. Don’t just call it in – those kinds of conversations can get awkward fast, and you might end up apologizing instead.

Be sure to explain that as valued clients, they’ll be able to continue to get services at the old price for (specify a date, this should depend on how often people visit you – could be a month if you want).

Then keep track of who comes in after that letter, and before their last at-the-same-low-price visit, offer them a coupon for their next visit with something like 10% off – being sure to show them the savings (which is really reminding them how much your prices are now).

2) Make sure, as Derek says, that things look different. That could mean you offer fancier robes/towels/massage oil or whatever, as well as redecorating.

Enjoy the flow of income…

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Len Phillips

I liked your comments and feel you hit the nail on the head for Laura …
Not easy to get to the next level and take the clients with you … cheers

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Laura

Len,
Your comment really hit at the heart of the matter. I love my clients and I’m so grateful for them. But, as you said, it’s not easy to get to the next level and take them with me. I can sit here and play small to their ideas of who I am and what I offer. Or, I can own who I am and what I offer and play a bigger game.
Really.. thank you. I needed to hear that today.
Laura

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Laura

Thanks, Rachel! I will get to work and enjoy the ‘flow of income’ for sure!
Laura

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Billings

Hahaha..I actually had to rewind to 0:26 to see you make it rain em’ 00′s. Great lesson, nice tips. I enjoyed it Derreck

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Jennifer Kennedy

I recently splurged on a puerta cerrada, a closed door restaurant in Buenos Aires, Argentina. The chef invites you to their home and treats you to a magnificent evening of fine eats.

The best part about the entire experience was not only sitting in the chef’s personal home, but also being able to have a conversation with him about the food he was preparing, the ingredients, and the wine flight he selected specifically for the food. It was such an intimate experience and quite different from what you’d get at a typical restaurant. You’ve definitely got my wheels turning on what I can do in my own business!

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Jeremy Montoya

Great stuff, Derek!

An experience that sticks out to me, was making the investment in Blog That Converts.

There were a million other choices, but I knew from the words you used, techniques you were already explaining, and look/feel of product that it was for me.

On top of just a good ‘pre-buying experience’, the follow up was fantastic, and I’ve most recently launched my “blog”… But, working on better name for it ;)

Thanks a million!

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Derek Halpern

Love hearing it!

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William Williams

So, of course, no one is listening to what you’re saying. They’re all intently checking out your hair.

I had to watch it twice to pay attention to your message. I’m struggling with a client right now where I feel I should be paid three times as much for the same work. I already do the things you suggest to improve my positioning. I just need to trust the process and raise my rates.

The I can afford a three hundred dollar haircut…

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Jackie Crino

Thanks for this video, Derek! Super valuable & entertaining – as always! And I love the example you used to make this point about creating awesome value to charge premium prices.

Also, thank you for dropping $310 on a haircut to create this valuable lesson. :)

~Jackie

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Ray Randall

Don’t bother looking at my site…it is defunct at the moment.

You’re a funny man with fascinating ideas, and an uproarious presentation (You must live on Long Island; pronounced, “Longisland”).

Well done!

Spent $60 on a haircut once; went home feeling guilty, yet proud.

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Susan

Excellent, Derek, just excellent information…and haircut. Especially appreciate the tip to rename the podcast.

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Mark

Dude! You got ripped off!

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Derek

Tell me why you feel that way

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Eric Werner

Hey Derek – can you share the name of the barber?

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Derek

Jordan Blackmore

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Dan

Do you not think that you’re prioritizing style over substance? I agree with you in what you’re saying about changing the perception that of your product, but at the end of the day it’s a just something that’s heavily window-dressed. Take away the gold comb and the fluffy dressing gown and all you’re left with is a good haircut, not a $ 310 haircut. Eventually people are going to realize that.

Let me ask you a question, and answer me honestly, are you going to go back and pay another $310? Can you really justify that to yourself? Or are you going to go back to your $40 hairdresser and isn’t he going to make more money from you in the long-term. Aren’t we better off focusing on creating products with substance that will result in long term and sustainable relationships rather than on gimmicks that might create one or two over-priced novelty sales?

Thought I’d play devil’s advocate :P

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Len Phillips

Kinda agree with you Dan … I loved the rant and can see other benefits that come out of this experience so -and so it worked . I tried a new one recently who employs lovely Asian ( not raciest) young things who wear low cut and up lifts and lean over you just enough, and the hot towel massage on the head and face at the end is to die for … $25 and they are lined up waiting …He now has 3 chairs going flat out ??
Will I go back ? you betcha BUT only when I feel like a little pamper and the WAIT … cheers

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Dan

Hi Len,

I guess that’s my point. You liked the service and you might go back occasionally. But as business people we should be trying to build a regular, not an occasional, audience.

I’m not saying that the hairdresser isn’t making a lot of money, but what he’s created isn’t a scalable model. It provides an exclusive service to a handful of wealthy individuals. The situations where this type of model is applicable in the on-line world, where both regularity in your readership and the ability to access high quantities of people tend to be important, are scarce.

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Derek Halpern

Here’s the deal: You’re paying for the service, the experience, and more. And it’s not catering to an occasional experience. It’s creating a “REGULAR” experience for the people who can afford it.

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Dan

I would be interested in knowing how many of his customers are people who can afford it but are still novelty buyers who never return. Obviously I can’t speak for him, but I would imagine it’s a high number. I may well be wrong.

Cyndi

I love that you are playing devil’s advocate, and I am paying close attention to all of this, because I am a stylist.
I do not believe this level of service is a novelty and nice robe.
I would have to ask Derek, but how much confidence is he going to walk around with for the next month. Even if he does not “do” his hair everyday, people are going to notice the expert cut. It is like wearing an expensive designer suit, but every minute of the day or night. Based on the feeling alone, $310 bucks is a bargain, imho.

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Renee

Derek,
Did you ask him if he sold gift vouchers? I used to work in an award winning day spa and we were booked weeks in advance. The main reason is that while not everyone can justify spending a great deal on themselves, they find it much easier to spend on their loved ones.
I really loved this video, it has given me plenty of ideas to separate myself from my competition, not to increase my prices, but to make people feel they are getting more value from my services.
P.S. nice hair ;-)

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Sasha

What I learned from your video:
1) Elevate your business and avoid generic terminology (so you can charge more)
2) People can charge whatever they want for their services if they deliver the service, the experience, and the vision
– listen to your client but make strategic recommendations
3) Everything about the experience needs to feel different than the usual (in a good way)
– make your service luxurious to create a better experience for a customer
– do anything that puts you ahead of your competition
4) Be great at what you do–study your craft and continually hone your skills)
– educate your customers on what they can do without you.

A Splurge Experience:
When I graduated from college, I decided to buy myself something really fabulous as a gift for getting out of school a year early. To that end, I went to the CHANEL boutique in the city where I went to college and purchased a charm bracelet. Now up until that point in my life, I had never had anything as “high-end” as CHANEL, so the $500 price tag was something I had saved up to make the splurge.

The experience was totally different than if I were to have gone to a jewelry counter in a department store and purchased a bracelet. The saleswoman laid everything out on black velvet monogrammed jewelry clothes, put the bracelet on me, allowed me to try several different charms, discussed with me the proper care and maintenance of the bracelet, etc.
After I made the purchase, she packed the bracelet in the most elegant gold tissue paper and boutique box.

I felt like a million bucks!

That experience happened almost 10 years ago and I still remember it like it was yesterday. I still have the bracelet and smile every time I wear it because I remember the great experience I had when it was purchased!

P.S. Derek, if you ever need help knowing how to wear a collared shirt without getting pit stains, let me know! I’d be happy to schedule a consultation with you…dressing people is what I do:)

Sasha
Confessions of A Fashion Stylist
Website: http://sashabowmanshops.com/
Blog: http://sashabowmanshops.wordpress.com/

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Sarah

Thanks for the recap Sasha! I love a good list breakdown :) You experience at Channel sounds so, so, so wonderful!

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Jordan J. Caron

Nice recommendation on helping Derek with his perspiration!

Most of all, thank you for summing up this video. Pricing is a funny thing and sometimes people will pay far more then what the service is worth.

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Joel Alain

Great video. I love how trying new things that have nothing to do with your business can lead to massive epiphanies or learning experience.

But I need to add a warning to doing this. In the past 10+ yrs, i’ve been doing web design, database, web ergonomy, etc for small businesses (i was a web designer doing everything) and i am a massive perfectionist. So i used to try to convince clients that they needed something and then went on to explain why x and y and z and so on and most of the time failed. And that really annoyed me. It also took me a lot of time to understand that:

1- you need to talk to the right crowd. “Don’t try to teach the pig to sing: you’ll annoy the pig and waste your time”. In your example I was trying to teach the passerby why he needed the ultimate 300$ haircut. For some reason, it took me enormous amount of time to realize that i needed to explain that to the right person.
2- it’s important to practice the message delivery: even with the right crowd, you’ll still need to practice explaining why your product is worth its price (in text, images, words)
3- when you respect point 1 and 2 and it still doesnt work but you know what you’re saying is important, then you need to bring that information indirectly. For example, if you say “eat your vitamins, it will helps your cells be healthy because of x and y” and it doesnt work, then you could try option 2: make the person eat crap, then make them do something physical and smack in the middle of it, ask them how they feel. And say nothing else. The next day, give them an amazing salad + energy source (baked potatoe or little meat) and make them exercise again. Stop them again in the middle and ask them how they feel. They’ll say “GREAT!” and that will probably help them understand why they should eat healthy. If something doesnt work in a way, change the approach.

Joel

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Lacey

Excellent points!

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Meagan

yes, I realized early on that no matter how great my soap is (and it is amazing–raise the goat’s that I milk by hand, use Texas Grown and produced organic olive oil and therapeutic grade essential oils instead of synthetic scents, make it all completely from scratch and hand pour it into shape molds, using the cold process soap method, one bar of soap can take a month from start to finish….pretty special stuff) setting up shop at a flea market and trying to explain to walmart customers why $10 for a bar of it was actually a steal of a deal for this reason and that was kind of a waste of time. Now don’t get me wrong, as much as I despise walmarts general quality of products (shirts start falling apart usually after one or 2 times washing it) I do like their low prices, but when I go to make a big purchase (like a TV, computer, clothing, etc) I prefer to shop elsewhere because I want it to work and I want it to last. My husband is a handyman mechanic, he has more tools then I want to count, I love him dearly but sometimes I think he has a problem when it comes to buying tools, early on we came to an understanding:

When you need a tool, you have 4 options:

A: ask a friend
B: Rent from a store
C:by a cheap but very low quality throw away tool
D: spend a little more on a higher quality longer life tool

Now, when he graduated from MMI as a motorcycle mechanic his Grandma gifted him all sorts of snap on tools (high quality lifetime warranty, big price tag) but that was 12 years ago and he has come to see that most tools got lost instead of broken, so now if it is something small and easily replaced we buy it cheap (usually from harbor freight) if it is somethnig he is going to use a lot and most likely not lose we guy a bit more expensive (like his huskaverna however you spell it chainsaw to cut down trees around our property)

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Kimberly

It’s so true that you get what you pay for.

I totally relate to your pricey haircut experience. I’ve had a few of those, and once I had the first one, it was impossible to go back to the standard $60 haircut! When I first moved to where I live now, I actually researched “best hair salons” and “best stylists,” etc. to find someone really good. So I found a guy who is actually from this town, but who for years had worked in LA and NY and with tons of celebrities. He was pricey, yes, but worth every penny! There was the 20 minute consult in the beginning, where he asked me about my lifestyle, what I did for a living, what my hobbies were, if I did any sports, how long I like to spend on my hair, etc. etc. because all these things would determine what he would do with my hair. Then the neck massage, then the detailed instructions about how to keep the cut looking great, and even a two-week touch-up for free, just like in your experience. And there was also the beautiful space he worked out of, with the complimentary champagne or coffee or other beverage of choice. (Naturally, I chose the champagne.) Not only that, when I took my new haircut for a tour of DC a couple weeks later, all my friends there were blown away and were saying things like, “you look like you went to LA or NY for that cut, amazing!” And the cut stayed looking that good for months. It really was extraordinary.

This experience, like other high-end experiences I’ve splurged on, was all about being made to feel uber-special, important, and precious. When a service provider makes you feel that way, in most cases you’re going back to that same provider for more, because it’s nearly impossible to go back to ordinary once you’ve experienced extraordinary! I try to provide the same level of care to my clients, although I haven’t quite figured out how to offer a glass of champagne virtually yet! : )

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Brad Reed

I was gifted a day at an all inclusive resort in Cozumel Mexico as part of a cruise. All the food, beverage (including “adult beverages!”) swimming pool, towels, beach toys, snorkeling gear, etc. were included. It was an awesome day to say the least.

The experience was VERY interesting to me because I got to look back and see what I had chosen to do when I didn’t feel like “I have to get my money’s worth!” because it was all included and it was a gift!

It was a very revealing experience for me, and showed me how to ENJOY what was in front of me, instead of over-thinking how to maximize the value in order to get my moneys worth!

AND I’d love to go back there again because the place was awesome!

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Lacey

I have to say, this is one of your best videos yet. You always come with killer nuggets of priceless wisdom. Thank you.

And, nice haircut.

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Melanie Duncan

Worth every penny! Looking dapper Derek!

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Steve

Raising prices is one a top strategy (one of Dan Kennedy’s go to suggestions).

Figure out how to increase the value for your customer & you can blow the top off what you might think you can charge for your product/service.

Exclusivity, Status, Symbolism, Connection/Community, Service, and Intangibles.

- Steve

P.S.
Nice haircut, Derek : )

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Joshua Rivers

My wife and I are starting to get to the point that we are looking at value, not just price. Instead of generic products, we sometimes get the name brand (not always, because there are still some generic brands that we like better). But I’m looking at other aspects:
How long does it last?
How durable is it?
What about customer service?
Does it simplify things or save time?

One example is hiring someone to take care of our lawn versus doing it myself. This past summer we hired someone (and crew) to take care of our lawn. They did mowing, edging, trimming, etc. It cost me $30 for 15 minutes, but I feel it was well worth it. First of all, it would have taken me closer to 2 hours to do the same work (and I wouldn’t have done it as well). I didn’t have to buy gas or maintain equipment. I got to spend time with my family. I always had a yard that looked great!

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Mike Taylor

I like how you deduced the thought process behind justifying above average fees. My big splurge, was a very expensive Italian dinner for date night. It was superb. The chef came out andd asked how we wanted our meal and we had a good discussion about pasta and wine. I will never forget it.

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Wil

Hi Derek,

The subject line and email message for this post were absolutely compelling.

My wife and I enjoy splurging on trips. For example, one experience was staying at a resort is Carmel Valley, CA. The room wasn’t the best, but the service was tremendous, the ambiance made you feel like you were in paradise.

Although my massage wasn’t the best I’d ever had, I did get a nice robe which included a lounge area by the pool while you waited for the message.

Also, there was a sauna and steam bath and all sorts of amenities that made the massage and “resort” stay, both memorable and desirable.

I will go back for sure!

Thanks for the great content on how to raise the level of perception with my services and products.

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Jason SurfrApp

I think it’s interesting to look at the cost breakdown based on time spent:

$310 – Approximately 3 hours (1.5-2 at first visit and another .5 hours on the free 2-week cleanup).

$103 per hour when you look at it that way.

Now factor in the higher cost of gold combs, better ambiance, plush robes, rustic atmosphere, etc.

I’d be willing to bet after all overhead, the Studio isn’t making much more per haircut than your standard $20-$40 place.

However, and this is the important part to me, who is offering a service that’s purely a convenience with lowest common denominator customers and who is offering a service that’s in demand and only gets higher end clients?

From a business owner perspective, that’s the true value in my mind. Being able to KNOW your customer base will be loyal, will be low maintenance, and will always trust your vision for your company. Plus, you have a built in marketing plan when you run a business based on experience and not on quick service.

Great video and the haircut looked solid :)

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Naveen Dittakavi

How we made a 6 figure decision:

My fiancée and I recently signed a contract with a hotel for our wedding. This was an incredibly difficult process as we were evaluating wonderful destination properties in Destin, FL, Savannah, GA and Amelia Island, FL.

I explained to a friend how we experienced “white glove service” and how far apart one hotel that we signed with was from everybody else. Perhaps we went about this the wrong way and started with the top property on our list: The Ritz Carlton.

I explained that prior to our visit, I had spoken with the Catering Sales Manager there, Erin about our visit. During our preliminary call and when we confirmed our visit, Erin asked us what vehicles we would be arriving in. As someone who strives to be a white glove provider to his clients, I took note of that question.

When we arrived at the valet, we were greeted with “Good Afternoon”… and because they had our vehicle in the manifest, they guided us to the lobby, welcomed us and said that Erin is on her way to greet us.

Erin’s tour of the property was flawless but I specifically noted her presentation of the guest rooms. You see, a hotel salesperson is not going to show you an occupied guest room. But what was incredible was that Erin would knock on each empty room’s door, announce “Ritz Carlton Front Desk”, wait for a response, and only then unlock the door with her master keycard. The rooms were flawless and clearly were not occupied.

She did this not for just the first room she showed us but for each of the two additional rooms we received a tour for. The consistency was remarkable.

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roxy

Derek,
now it’s time to get some awesome bespoke shoes!
You know where to find me.

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Natalie Jean

Amazing video Derek! I have always felt bad about my high price point but by classing it up a bit and providing a great experience for my clients I won’t feel so guilty for charging so much!

In regards to your question, what I learned about high-end experiences is if you make someone feel special no matter HOW you do it. It matters. Everyone wants to feel like a VIP. The hair studio did that for you. For me it’s a nail salon down the street who is always willing to go the extra mile or let me try things for free to make me feel like I was a VIP and “in the know.”

Thanks again Derek for a great video!

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Michael

I sincerely appreciate the wisdom in this video!

It can be a fight to move beyond the inclination to name products and services within convention; but you just rekindled the fire to wow and woo when it comes to describing what I do, and to live up to those stellar names too.

“The difference between the almost right word and the right word is really a large matter—it’s the difference between the lightning bug and the lightning.” ~Mark Twain

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Dave Linabury

Great haircut, Derek!

I do splurge when expertise is proven. My splurge is similar to yours. I love getting a traditional straight-razor shave (about $70). It takes over an hour. The stylist rubs various amazing smelling oils into your face and hot towels before touching you with a blade.

If you’ve never had one, Derek—do it. Back in the 19th Century, it was men who got all the salon treatments, not women. Getting a proper shave was one of the weekly treats men gave themselves.

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jennifer

I learned a LOT from this video. I love learning a lot! Thanks home-slice.

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Tanya McGill Freeman

Super video, Derek! You’ve once again taught me so much great info packaged in only that very entertaining and informative way that you can. Thank you!

My hubby & I both personally learned the value of delivering VIP experiences to others in October of 2011 when we chose to be married & honeymooned on a luxury cruiseliner as opposed to an average cost ship. Hey…it was our wedding and we decided that it was worth it to do it right! Was it ever. I won’t mention the cruiseline that provided the unbelievable experience for us, but we were treated like royalty from way before we even left the dock until even after the cruise was over. It was the absolute best investment we could have made in ourselves and the memory of our wedding.

When you deliver premium experiences (or moments of “wow” as I like to say) to others, you not only provide them with something they treasure – you also position yourself & your brand WAY above the rest in their minds…and often in their hearts, too!

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Dodie Jacobi

Craving a before and after of your hair, Derek:) Excellent post with validation for what I’ve been doing, but encouragement to ramp it up. Now. My luxury experience!? I’m testing this edge constantly. I will pay up for value. Most recent one? One shot from a $500 bottle of tequila, lightly chilled, served on an evening darkened rooftop with 360-degree view of historic San Miguel de Allende, and a side of decaf espresso as I’d requested, AND their recommended side of a shot of super spicy tomato juice. My duo of tequila and coffee was very good – the perfect after dinner drink with brandy intensity and tequila herbal vapors. Their recommendation far superior. What was in that tomato juice!? Add in the price of air and accommodations to repeat, and it’ll be a big splurge for do-over indeed. But what makes the splurge worth repeating backs up your experience with the haircut: context, service, and expert recommendations. (Wish they had a touchup program a la your stylists’!)

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Ron

Hi Derek,

I think it is worth noting that your friend “referred” you to this guy, and NOT one of the $10-$40 dollar places, in the first place. As a business owner, you will not receive any kind of significant referral business unless you are “novel” in some way. Referrals are the best and most cost effective way of getting new business, but you have to EARN the referral by being unique and consistent in your delivery of whatever you do.

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Reuben

I splashed out on a weekend getaway to a very fine hotel – with spa included. They treated me and my girlfriend like royalty and provided excellent service!

Great video – I should really get my haircut…

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Laura

Derek you are brilliant!
I talk with my clients all the time about positioning and your video will now be included in my “brand positioning” reference material for my courses and training. Positioning is so important!
And I have noticed how fabulous your haircut has looked recently!

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eric

We got married in Québec city, which was a destination wedding specifically for the food (No matter how crappy the restaurant, the food is awesome). Our wedding was held in a boutique hotel and we treated our 18 guests + us to the hotel brunch the next day. Food was awesome!

That night after everyone left, my wife and I went to a recommended restaurant by people who live in the area. It made every other food experience up that point (in my life!) feel inferior.

The cost for that meal was more then the cost for brunch + tip for 20 people. And… it felt like a bargain. I haven’t spent that kind on money on a meal since, and the experience has not been surpassed either.

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BrendaS

Another good one!

In 1979 I used to spend around $100 every 6 weeks at the Saks salon in Chicago for their hair experience. It was more than a perm and blowout. Mr. Larry actually wore a three piece suit and tie and would take my elbow as he escorted me from station to station.

Years later, and I’m in the gourmet pastry biz. I wasn’t getting the local customers I wanted so I targeted a very affluent area (about 25 miles away) and tripled my prices. Business went through the roof. Turns out I was selling more than chocolates…my customers were also buying an EXPERIENCE that they were willing to pay a premium to have. There’s a different psychology to selling to people with money. Plus, they usually treat you way better than the tightwads.

I’m working up to asking a premium for my current venture. It can’t hurt!

Cheers

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Dominique

Thank you for your story! Very encouraging! Ive recently started a vintage clothing venture & since its online Im able to build the experience differently – daily. Its the mail/delivery piece where the experience is almost out of my control. Any suggestions ?

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BrendaS

Hi Dominique,

I just looked at your website. Very nice. Not sure I understand your question about shipping so please clarify. If necessary I can respond through your contact form.

I should add that I took the business online for awhile but most of my items were difficult to package or too expensive to ship fresh. However, several my regular customers would pay whatever it took to send a unique surprise to someone special. Ultimately, I moved to another state and lost my main client base. Which is why I’m doing other things these days.

One more thing – I had a back story and a well-known sponsor of sorts. (Guilt by association.) Wealthy people – especially women – like exclusivity and love to talk about how they “discovered” a new resource. If you sell hard to find vintage/couture goods it seems you’ll do much better targeting the affluent 5-10%.

Hope I helped some.

Cheers

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Julie

A ROBE! A ROBE! A BRUSH!! Hahaha that cracked me up. Loved this video and it’s inspired me to re-name a program I am launching to make it stand out more, so thank you so much for that! One question – you said at the end there to tell people what they can do without you. I would love to hear more about that. I think what you meant in the hair cut example is that he told you how to take care of your hair at home afterwards, but how would I apply that to my business as a social media strategist? Would that be telling them that they could obviously just search & learn on their own….but the benefit of working with me would be the time savings, the experience I have acquired over the years, etc? Just wasn’t sure I followed on that part. Thanks!

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Dominique

Maybe give your clients a to do list? Ek, a mentor did that once for me really helped

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Bia

I think he was trying to say that we should give to customers things for free like he is doing with his videos, or a tip or knowledge…

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Daxtin

Nice video slick cut!
I’ve splurged on a $1800 bottom grill for my mouth lol funny you mention in this email today.
Quick question…
What kind of content would I build a blog around for artists?

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Len Phillips

Kinda agree with you Dan … I loved the rant and can see other benefits that come out of this experience so -and so it worked . I tried a new one recently who employs lovely Asian ( not raciest) young things who wear low cut and up lifts and lean over you just enough, and the hot towel massage on the head and face at the end is to die for … $25 and they are lined up waiting …He now has 3 chairs going flat out ??
Will I go back ? you betcha BUT only when I feel like a little pamper and the WAIT … cheers

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Darrin Bentley

Great stuff, as always.

Best regards,
Darrin

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Jen Bardall

Not so long ago, getting my hair professionally colored (vs spatter painting my bathroom courtesy of color out of a box) seemed like the biggest splurge ever. If I can do it for $10, I reasoned, why would I pay someone else $100 or more? But I finally treated myself for my birthday and BAM! What a difference it made. Now I get it. Not only does my stylist do a great job, but I feel taken care of in her salon (which isn’t just some chain establishment). A year and a half later I’m still going.

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Jeremy

Oh man, I loved this one! Hilarious and learned a lot. I think it must be the funniest video of yours that I’ve seen so far, haha. Thanks for making it!

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Sarb Glaze

I’m a new subscriber to your newsletter and your video’s. Great, great video! I was thinking, even if you don’t go back every month for a hair cut, you had such a great experience, you’re probably going to talk about it to your friends. A great experience lends to good, free word of mouth advertising, right? ; ) You may have put this studio on the wish list of many people and even if they don’t go once a month, they may try it once or twice and also spread the word about the studio.

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Carol J Alexander

I’ve been following you for some time, Derek, and I think this is the best video yet. No matter what our business, this advice applies.

What do I splurge on? Shoes. I only buy quality shoes and most times that means $130 and up. No $20 pumps for me. My feet have to feel good or the rest of me doesn’t. The plus is that I can wear a pair of shoes for 5+ years where the $20 pumps last a season.

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Avelardo Lopez

I really enjoyed the article and the video. Great presentation today.

PS: Didn’t notice the pits, think that you are OK.

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Fit Missy

Do anything you can above the rest – this is very valuable.

ps. I couldn’t sit through a loooooong haircut even tho I am a woman. No patience. :)

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Erin

I’m really horrible about splurging for things most of the time… I’m a Craigslist/Goodwill shopper most of the time!

I am realizing though, that you often get what you pay for. When clothing falls apart after a few washes, it doesn’t matter how good of a deal you got on it, you have to spend more money to replace it. And bad shoes? Don’t just fall apart, but can tear up your feet and hurt your back!

I’d say one of the biggest splurges has been on Marie Forleo’s B-School. I’ve read a lot of books and taken cheaper business-type classes, but none have been so thorough or as motivating at B-School! The experience is so high above the rest that there’s no comparison.

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Luz Donahue

Every time I hear someone talk about B-School they loved it. That’s definitely on my list of things I want to do… She’s brilliant.

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Vinny O'Hare

3700 a year on haircuts, if this guy does 3 clients a day and only works 300 days that is $279,000. Much better than the average barber I would say.

He should work with a fashion guy to recommend clothes to his clients at the same luxury.

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Sasha

That’s a great idea Vinny!
Actually I would love to know who this barber is so I can contact him asap as dressing people is what I do.

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Suzanne

Great points, Derek! Everything you said is on point.

And yes, your hair does look better, so it was worth it! :)

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Rebecca

Ha! The REAL key to this guy’s success was revealed between 1:13 – 1:28 in the video when you quickly skim over the fact that this hairstylist had been featured in major fashion magazines, trained under a major stylist, and had participated in major runway shows. Of course he’s going to be able to charge more! The rest of what he does might play into his success, but without those first few things mentioned at 1:13 – 1:28, I doubt they’d make any difference to Mr. Podunk What’s-His-Name in small town America. Mr. Podunk may do all of the other things that this hairstylist has done, but he’s still Mr. Podunk, not Mr. Cut-Your-Bangs for Big Bucks. It’s like the difference between buying a Gucci bag versus an unknown brand, even though that unknown bag brand may be every bit as well-made. A big name brand and money are ultimately what count. And it takes big money to get there.

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Dominique

it took the Gucci brand yrs to get that rep… not to mention it took Tom Ford taking their designs in a risky direction before there name was restored to the powerhouse we know & love

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Rebecca

That may be – but I live in an area where the economic reality is that the average wages put us very close to the bottom of the 50 states. Somebody paying a fantastic price for one of my handbags simply isn’t going to be realistic here. Trust me.
I’ve also tried online selling (been at it for over a year now) and sales are flat. So far, the best venue for me has been to go to shows. However, I’ve had to price my bags at what the market will bear, which is somewhere between $20 to $65. My $85 bags rarely sell. I’ve bought a better machine in hopes of being able to make handbags more quickly, because I see that as the only way to meet a realistic price range for people and make more money for myself.

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Tree Architect

Rebecca, I think that you totally missed Derek’s point.

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Rebecca

Tell me why.

Rebecca

Tree Architect – Tell me what point you think I missed!
I realize that offering a service or product “above and beyond” the norm is part of the point Derek is making – what else, in your opinion, am I missing?

Rebecca

I also realize that you constantly have to look for ways to improve and distinguish your product or service from others. Often, as people have said here, seemingly minor things can add up to a big difference overall between you and the other guy. For example, at one show, when I offered a free fashion ring with the purchase of a handbag, I sold more handbags at that show than other handbag makers there. And the “fashion rings” I made were very inexpensive and quick to make. I am constantly tweaking and improving here and there, and in that respect, I do see where Derek is coming from.

Tree Architect

Hi Rebecca,

1. you make the mistake of putting up a pricetag that’s “comparable” to other brands. THe only thing what you offer is a different or more beautifull product. And that depends on taste. So a customer will compare yours with another. If you are more expensive, why would they buy from you?

2. Which brings me to the second, WHY would people buy from you? And don’t come up with the reasons I wrote in nr 1, What distinguishes yours from anothers? And, most importantly, in the eyes of your customers, NOT FOR YOU. You should ask yourself: what’s the value for my customers to buy from me? In other words, what’s in it for them? What will make them pay you more? Just the price isn’t enough, you have to deliver value for the customer.

3. In your post you say that you are pricing your bags at “what the market will bear”. That is so wrong. Never price like that, price your stuff as you should. Meaning that you have to know what the actual cost is AND what it’s worth for your customer. You have to test that out.

Make something that peole LOVE and not just NEED and you’ll be selling your bags for 150 bucks.

Karen Lange

Appreciate the info – thanks!

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Dominique

Great advice & right on time!! Thank you

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Nick Armstrong

$310 haircut -> update all avatars immediately.

Also – intro bit, hilarious. Well done.

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Luz Donahue

When I realized that I didn’t like my business anymore and wanted to start from scratch, I got a part time job. I started working for a small Pinot Noir producer in Northern California. For someone of my means, they’re wine is unattainable but a few weeks of tastings and insight into what went into the production of the wine I invested in a $70 bottle of wine.

My normal drink is usually Yellowtail.. or if I’m feeling splurgy, I’ll go to trader joes and drop a fancy $16 on a bottle. Being there, I learned about how they treat their customers and how the owner hand grooms certain sections by hand. They let you see everything about how they produce what they do and you feel like you are in paradise in their vineyard. Mind you that… this is a stretch for me. But it was 100% worth it and I would do it ten times over.

Needless to say, I drink drink wine as often, but I would WAY rather drink theirs.

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Luz Donahue

Bleh. NOOOO. Their* not they’re… *hanging my head in shame*

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Kevin

They make something called a flowbee that would be a lot cheaper. It has a 30 day return policy if not satisfied.

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Cyndi

True, but Flowbees do not get cowlicks, hair growth directions, and hair density that make for a good cut, even if you want all the same length : )

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Dan from Sweden

Sixteen years ago, I invested in a very well-fitting suit for $600 (which was a big splurge for someone without a job at the time). Though it was initially for my wedding, I planned so I could wear it for other occasions – and it still looks great.

My worst investment was buying a tie for $1, which I never wore because it was so ugly!

Thanks for the insights. The video image and stills on this post look sharper than previous. The script was tight, the story compelling and the time flew by.

My kids watched it with me (10 and 7 year olds), and they asked if there were more like that!

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Laura Black

Even though I live on a very tight budget, I do treat myself every six weeks or so to a special spa treatment. And I go to one, very special place for this treatment. I know I’m spending more than I can afford, but I also know that I am getting my money’s worth. I receive excellent customer service and I have developed a wonderful rapport with, Aimee, my stylist. Last visit, she blessed me with lots of samples to take home and play with. That gift has motivated me to go back and by product from her. Another splurge, but worth it!! :) Oh, and nice haircut, Derek.

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Ja Gold

Best Video Yet.

it’s Definitely the Hair.

;)

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Fel

I love this because it demonstrates so well what a higher margin for a business can do in terms of serving clients.

Just because a haircut is $310, doesn’t mean your hairdresser is going to perform magic on you. It means that they’re going to give you a hand massage while you’re waiting. Your favorite kind of tea will be served to you — whatever it is they know that matters to their customers and can create a truly different experience.

When you’re in a commoditized market and you provide that kind of service, it becomes very, very difficult for others to compete. They themselves don’t understand what raising their rates could do not only for their service, but for the experience of their customers.

Thanks for sharing. :)

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wendy merron

After I watched your video I went back to an older one of yours to check out the “before” and “after”.

Definitely looking sharp, Derek!

Experiences are way more important (and long lasting) than things. You’ll always remember your experience of that awesome haircut.

Even an experience of exemplary customer service can be memorable.

But, as you know (and say), we’ve all got to step up to the plate and make sure that we always provide awesome value.

Thanks for another great video!

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Alexis Pierce

I love this! Welcome to the joy of an afternoon at a high-end salon.

I shopped at a Department store once and they put me in a luxury room, asked me what I was looking for, and then brought me selections they thought would flatter my figure. It was the most phenomenal shopping experience of my life because I felt special and acknowledged. It also saved me the overwhelm and anxiety of roaming through racks.

Since then, one of my goals has been to afford to have people shop for me all the time.

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James P

Thanks for sharing this Derek, great story. It’s really interesting that people are willing to pay 30 times the standard for simple luxuries. Amazing!

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Kate

Hi Derek,
I enjoy your articles but can’t listen to your videos because I’m hearing impaired – like possibly many of your other subscribers. Would you consider putting subtitles on them or attaching the script so we can also see what you are saying?
Many thanks,
Kate

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Len Phillips

Kate the script would work my blind Buddy uses the software that reads back to him and I wonder IF this software could call out the video audio ? do not know BUT I am sure there is a way as you people have a way with everything when determined … best of everything … I help my buddy with Lawn Bowls and he’s am Aussie champ and always surprises me with everything he does . Walks with a GPS and has a memory for sport as good as a computer recall .. cheers

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Fernando Ziemer

Hi Derek,
Thanks for the great post! Loved the take aways.
Your YouTube annotated links aren’t working properly. Do you know why that is?
Cheers,
Fernando

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Miche

My partner bought me custom made shoes for $400. They are the premier shoe designers for all the entertainment industry in Melbourne, Australia and sometimes other parts of the country. Beautiful store, personal attention with no time limit to how long it could take and they even found a way for me to reduce the cost – if I’d needed a last made, then I was looking at over $700, but the woman serving me used the same size last, so I was able to use hers. Totally great experience, I returned for another pair (also $400) about 3 months later.

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Rebecca

Would you have paid the same amount of money for an equally well-made, but unknown, brand? I mean after checking the product out, and finding that it was as good or better than the well-known brand. Or do you buy something strictly on brand name alone?

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Darren

From now I am not a web designer.. I’m a creative consultant. And I agree with everything else you said – educate the customer. It DOES seem counter-intuitive when you tell people how to do something themselves when you could be charging for that knowledge. I regard it as teaser content to build credibility — I use the phone a lot to consult with clients and this works we.. Because of my tight geographical niche word is spreading fast. I just need to raise prices again soon

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Alan

Hey Derek, great points about positioning. I had a similar experience when purchasing a BMW a few years ago. My only complaint – you didn’t turn around so I could see what a $310 clip looks like from the back!

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Clay

Derek, I can’t believe how much I learn from every video and email I get from you. You have a great way of explaining the lessons we should take from your stories. “Become the expert people want to go to.” I’d say you have done just that. By the way, the first article I read from you was about going to a spa, and now this. I have to say it. Metro

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Mark

Great video – love the bulldog reference!!

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Dwayne

Hi Derek,

Great message, as a business strategist I charge a premium charge. I’m not just another management accountant, I provide you with strategies and identify problems you don’t even know about.

I love golf so sometime a play inexpensive courses and then I will splurge for a premium course and a premium experience.

I love the short video messages.

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Ricky Figueroa

It is funny the fact that I went through a very similar experience… last year when I visited Germany. I went to the same hair-styling studio that my girlfriend goes to frequently, and they did everything you described in the video.

The only difference: the hair-cut was almost $100. Keep in mind… I only went to barber shops my entire life, and that was my first time going to “the best hair-stylist in Osnabruck, Germany” (based on my girlfriend’s opinion), and I was able to experience the fact that they not only sell you the hair cut, they also sell you the vision and a very different experience.

What I’m very inspire about is on how you (Derek)… embodied that experience and turned it into a very educational and fun business lesson.

I saw somebody commenting, “Dude, You got ripped off!”

Honestly, I don’t think you did. I believe you were able to get more out of the experience than the $300+ expense. I would almost consider that expense an investment, because you were creative and aware enough to turn it into a great piece of content that is now working (and producing) for you 24/7.

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Olga

Loved the video and the tips and the hair :) I also realized that even though I found continuously changing camera angle slightly annoying, it kept me from zoning out.

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Cyndi

I loved this lesson Derek. I am a stylist, a pretty experienced and unique one, but even after having my license 30 years, I could never do a fade with just scissors, gold comb or no. That is pretty impressive on it’s own, but his educating you on your hair and products, and having an immaculate and well decorated place is great too. The robe is not really that weird, a few male clients wear them where I work, because it keeps their shirt collar dry and hair free. And the brush is great, it will keep your scalp healthier than a comb will. Thanks again for your video blogs, I am inspired to do better.

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Barbara McKinney

Thanks for sharing this info Derek.There’s always someone who will offer a cheaper service but most of the time we are not satisfied of its outcome.May I know the name of that haircut? :)

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Martina

Exactly the direction we are headed in, couldn’t have said it better myself! Thanks Derek

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Blasko

What the REAL lesson was (in my humble opinion) is that he got Derek back for one more time….for FREE…..that time he can schedule his next hair cut or offer him some products and keep on building the relationship even further.

I think that on top of the total experience he offers that little extra step is definitely my favourite tip. Get them back and offer even more over the top service as well as eduction and you have more chances they’ll come back again or at least refer you.

Thanks Derek

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Marc Ellis

Hey great video – engaging and entertaining glad you liked the 300 hair-cut however unless i get to keep the gold comb i wouldn’t spend drop that on one

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Marc Ellis

Hey great video – engaging and entertaining glad you liked the 300 hair-cut however unless i get to keep the gold comb i wouldn’t spend drop that on one befriend a gay guy friend and you’ll get the same service for free if he likes ya-

no pit stains witnessed however as a gay guy if you’re going to shell out 300 bucks on a haircut and wanna wear pink as a white guy with dark hair you gotta wear a dark tie (black or navy blue preferably ) or not tie and a dark blazer with that shade of pink to better frame yourself – you look white washed or mistakingly like a pink eraser face through chest imbalanced with not enough dark to balance the light with complexion and shade of shirt.

By the way id charge 150 for that tidbit of info but since i liked ur video you’re getting it for free! ur hairstylist gave you by the sounds of it an exceptional experience but frankly your hair was the last ting i could focus on due to the shade of shirt and complexion clashing -= cuz if you can’t style your clothing accordingly the eyes wont even recognize the work and detail that went into your cut!!!!!

not trying to be a dick like your confidence exhibited in wearing pink just think you deserve to know how you’d rock it better since being so open about if you wanna opt out on both blazer and tie id suggest fuschia for ya as a better fit

cheers

marc

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Tree Architect

hi Derek,

I totally believe what you are saying, The last year I’ve been looking for nothing else to get to that level but I find it to be more difficult delivering a service, in site, in a garden. I design growth places (underground) for trees and my crew doe s the maintenance of trees in our own specific way, not comparable with what my collegues do.
But what about this?: Porsche (the cars :-) )was never profitable until a few years ago, the new CEO, started making cars (their “cayenne”) that was more affordable than the normal Porsche. They started making cars for a lower budget but – off course – based on Porsche knowledge and branding. That’s when they started making profit! Yes, they were non-profitable for decades!!

SO, here’s my question: what about this? Delivering a great product for a high price can give you a big turnover but no doesn’t necessarily mean that you make profit. What is your thought on that? How do you handle this?

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Tree Architect

Do hope you can answer this one @Derek

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Ewa

Hi Derek,
I enjoy all your blurbs! Thanks.
I get the lesson, but I still think that the “hair artist” in his “hair studio” swindled at least $200 out of you.
I go for a haircut at the hair studio too, get the robe (yours might have been more cozy!) and an herbal tea into the bargain, but I never pay more than $100 plus the tip. I admit I don’t get the free clean up, and the hairdresser does not have golden tools, but I am happy with the service.
As far as Vitamix goes…it’s a different story. I love my Vitamix! :-)

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Alan

Hi Derek,

good stuff – but the part about learning is probably overplayed in terms of what’s attractive for that price – as you’ll only get that from the first visit (at least to the extent you’re describing) – maybe the first few visits.

The part that people might want to come back for (if they want and presumably have long term customers) is the experience and though it starts off as amazing and different – this still needs to be justifiable at that price point when it’s consistent and familiar.

i.e. on their 5th time customers aren’t going back to be wowed but because they like and have come to expect the robe and the gold comb.

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Megan

It seems to me that growing accustomed to such luxury would make it that much harder to go back to a “less than” experience.

It would be like trying to eat at a McDonalds, or even family dining chain restaurant after eating at the fancy seafood house every week.

Once we grow accustomed to upgrades, it can be very difficult to slink backwards.

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Jenny Locke

I have just splurged a lot of money on some tickets to see The Rolling Stones. I already know I am going to love cos I’m a fan. It’s not something that I do all the time though. A splurge to me is a special thing and more of a one off (depending on the cost).
You got the experience and it was novel and different so had the WOW factor.
Let us know if you keep on going to this guy or if you go back to your regular barber. Your hair does look really good I gotta say.

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Tristine

Wow….since I am a Salon owner and Hairstylist I really appreciated your info. My salon sounds just like what you described on your video. However, my prices aren’t that price…wish so. I live in Portland, Oregon and everyone is really frugal. Grew up in Calif. and it is so different there, people appreciate perfection and will pay for it.

Thanks for the blog,
Tristine

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Peter

So are you planning to go back again?

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peachfront

Interesting post, Derek, as I tried similar experiments over the years. Similar experience here: “He convinced me that his vision for my hair was better”…yeah, it was better for a day but in my case I just have [expletive deleted] hair and it didn’t stay looking good for two weeks — not even for two days. I woke up the next morning, and the magic was gone…didn’t matter what price point or whose vision I used. It all went to you-know-what once I slept on it.

A similar splurge: I tried a couple of the $1,000 skin care systems, and it’s the same deal. You start out with high hopes but they do sweet eff-all really compared to injectables and/or cosmetic surgery. If they did what they said, they’d be worth the money but…

At the end of the day it was all sizzle and no steak. Sure, I enjoyed the lovely Japanese model and the cute twentysomething boy flattering my ego and putting stuff on my face, but the results weren’t “amazing.”

So I guess what I learned that if you raise your price high enough, you will get customers because you’re exploiting their hope, and it’s easier to believe that an expensive product will work than a cheaper one. It seems like a form of hypnotism really. And hypnotism wears off.

As others have already pointed out, the million dollar question is, will you go back more than a few times? You will have to report back at the end of the year and let us know.

Someone mentioned $300 jeans. Now that’s worth it. I can’t remember if they were $300 or $400 but somewhere in there for Versace Couture jeans I got a few years back. They’re the most comfortable jeans I’ve ever had I think…I wear them constantly.

So some of these experiences are actually worth it, and others are just a mistake that everyone (or at least every woman) feels compelled to make at least once just in case…

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Rebecca

I so agree with you. I just don’t think a highly inflated price will accomplish much in the way of profits, overall. I think realistically, we have to look at where we live and work and try to set our products/services and prices accordingly. It’s called charging “what the market will bear” – and each of us has to find that sweet spot between where we can make a profit while supplying the customers’ wants/needs.

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francois

The intercontinental hotel in china .. cant rember the chinese name of the city but in english its the thousand lake city. The hotel was 5 diamonds… not 5 stars but 5 diamond ….. a 5 star hotel looks like a crack house compare to it oh and the view to die for also had a yatch ride and it was incredible and over all i kept on waiting for donald trump or beyonce to walk by lol … mmmmk beyonce lol

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francois

Oh and best of all i didnt pay…. i was invited by this extremely wealthy chinese business man. I share this point because i now associate him with the experience …. he splurged on me and created his brand …

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Shawnia Willson

Your hair looks great!!

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Kimberly

Such an excellent video, Derek! You really hit some very important points, including the importance of actually delivering the high-end service.

Several years ago, Microsoft killed my one year old laptop. I did have the highest level of service from India for two weeks. It was like I was dating that guy. I had to run home every other night to check if what he did worked.

So, I thought I am not going to buy a new PC laptop. I am going to buy an Apple – talking $1,700 vs $800, before tax. I was starting a new business, how can I plunk down that money and think of the impact on productivity. I knew PCs inside and out. I conducted massive research. I even had a spread sheet.

I walked in the Mac store just for more neurotic information gathering. I was confused on which Mac was really right…the iMac was a consideration too for video editing power (even more money). The sales guy walked me through pros and cons of each option based on my needs. Then when I made my choice he walked me through the programs on my new Macbook Pro – mail, iMovie, the finder, keynote… He actually was a video production guy, so he ran me through Final Cut and other options too!

When the Mac sales guy was escorting me out of the store to help me hail a taxi… in the pouring down rain!! …I said, “Now I get it. This was more than worth it. Thank you so much for the excellent service.” I was floating.

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Dave

Great stuff! What cool name would you call the computer guy (computer repair)?

Also – the hair industry really doesn’t change much – sure it evolves and goes through fads, etc, but the general methods don’t change much.

Not so with computers – as much as we (in this industry) can educate ourselves, new stuff comes out all the time. Example – customers ask me what model printer they should buy. Well, printer models change like every month – that’s awfully difficult to keep up on when I barely have time to keep up on the latest viruses! (Yes this is an enormous field to work in!)

Thoughts are appreciated. Thanks!!

Dave

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Megan

What if you called yourself the Computer Surgeon instead of repair man? Elevating your work with something as delicate (as well as pricey) and skilled as major surgery could make a difference in how your work is perceived.

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Michael Yardney

Some great lessons there.
Charging more will also select out certain types of customers, probably the ones you will enjoy working with

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Geniece Brown

Hi Derek. Great tips on how to charge higher prices. I’m a serviced based business online and have been focusing on this part of my business more recently. You always give great tips and very entertaining to watch and listen to. I really love your personality as well. Thanks again!

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Dan

Love the concept of honing skills and doing better-er than your peers.

Unfortunately people soliciting professional services (like web design) often aren’t prepared for creative direction (they prefer monkeys with mousepads).

I can totally verify with personal experience that raising the psychological barrier to entry (i.e. calling yourself a design studio rather than a web-designer) will instantly appeal more to the right kind of clients who are willing to pay for your excellent work & expertise.

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Patti

Great job delivering on this topic. WILL USE for my business, oh ya! Also, I now don’t skip a single article/video you produce because they are GOLD. Kudos to you & your team :-)

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Mathew

I have a question: I see that you are doing more videos lately, but I am a subscriber who prefers reading over watching or listening. So how do you draw the balance to your audience, is that not why you have different channels, like youtube for video, blog for writing, podcasts for audio and so on? I am not against what you do but just trying to find out your reasoning(psychology?) behind this so I can adapt it if its working for you.. Thanks for the great tips!

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Jodi

Great points – I definitely appreciate a “special” customer experience. There is a local boutique nearby where the girls all know my name and pull things they know I will like or call me when they get something in. They have wine or champagne and make it an event. And, if my husband goes in to look for a gift for me they know exactly what I like and they get him a drink, and wrap it up.

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Cindy Eyler

that was a great video, and very true. i loved the advice you gave on calling things by different names as well… i also tend to want to spend more to see what it is about, when it seems outrageous. it reminds me of these guys that offer a weekend seminar for $24,000. you have to fill out an application to get accepted. i cracked up and wrote to them telling them I absolutely love the idea. I told a friend and he said — would you go? I said, yes. He said, why? I said… because I want to know what they could possibly be teaching that is worth that amount of money! … and people who have that kind of money… well, that is a drop in the bucket and they will pay for it, because they think it is more exclusive. period. high dollar does sell if you do it right.

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BrendaS

When you stay at the Intercontinental in Tokyo they send a Rolls Royce to pick you up at the airport. Or, at least they did back in the day. So by the time you’ve checked in you’re already feeling like royalty. But that was then. Spend it while ya got it. Wonder if Supercuts is still in business?

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Denise Duffield-Thomas - AKA "The Lucky Bitch"

This is brilliant.

Charging premium pricing is great – but it doesn’t just happen – you gotta think about EVERYTHING – every touch point.

I’ve stayed in some crazy expensive hotels with awesome touches – like piped underwater music in the pools. They also ask you what you like to eat when you check in – and you never see a menu – they just ask what you want, instead of telling you what you can have.

And all the invisible stuff – like every single time you leave your room, they’ll clean it – even if you just left a tissue in the bin.

Probably one of your best videos – I loved it!

xx Denise

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Philipp

Interesting video, thanks for sharing your experience. Will you go to that studio again?

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Sage

I love this video. Your right there are things that make the service world class. In the world we live in today with all the buzz in society. People need to take an hour out of there day and be pampered and treated to indulge themselves in something relaxing and something that will last hopefully 4-8 weeks. More importantly something that you wear EVERYDAY. I am a hair colorist. I have been providing upscale service for 14 years . I work in a high end studio in Sandy Springs Georgia, a “burrough” of Atlanta http://www.vanmichael.com. Where we offer above an beyond customer service from the point of walking in the door to the point at which you walk out, with your next appointment pre-booked for your convenience.
Thank you for posting and showing the difference.

Sage Perry
Senior Color Specialist
Van Michael Salon
Sandy Springs
Georgia

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Caroline Centa

It was interesting, as when I first read this, my (internal) response was – “yeah, right. Like anyone would pay that much for a haircut, and if they did, they probably wouldn’t do it again – no matter how good it is. I don’t think it can be justified to charge that kind of money on top – even with gold combs!”

However, today is my birthday. As I sat in the spa at my local beauty treatment place, contemplating the fact that I am spending well and truly over what it would cost me to do the same thing at home, I realised the point you were trying to make.

Lets say you get a hair cut, once a month for $30. That’s $360 you spend on haircuts a year. But while realistically you won’t be going back to the $310 hair salon (studio) every month, there’s a good chance you’ll do it once a year – especially as you get the free top up. You’ll justify it as a special ‘treat’ for your birthday and you’ll lap up the luxury that you experienced. You may even find another excuse part way through the year. But if you only go once a year, that hair dresser is still making more than the one charging $40 a pop for you to go once a month.

I like the idea that they tell you to refresh your hair every month. While it is unlikely you will go there every month (unless you’re uber rich), telling you this may inadvertently encourage you to consider the costs over the year and make the parallel that I have. For less than the cost of getting the hair cut regularly for the year, you could get pampered – luxurious treatment. What a great birthday treat for yourself! And if I wanted to, I could then go and get $10 hair cuts the rest of the year to help justify my yearly expense.

So while the repeat customer won’t be as often, there will still be repeat customers – that’s where your customer service comes in – it’s got to be good enough for the client to justify the ‘spoiling treatment’, and then they’ll be back, probably once a year.

I have a suspicion you’ll be treating yourself to a haircut every now and then….

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Caroline

Thanks for the video, Derek. Those splurge experiences are memorable and i think that’s partly why we indulge; also because they make us feel like queens (or kings).

I paid a small fortune for a foot massage in a 5 star hotel in Bali and it was orgasmic (er, metaphorically speaking). It was also the delicate fruit water I was given before and after, the location (under-cover outside, next to a river), and the attentive nature of everyone working there. The expertise of the masseuse I haven’t come across before or since. Memorable. Exclusive. Personal. Way to go. I’d do it all again.

Thanks for your videos. I enjoy them a lot.

Caroline

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Dennis

Great stuff as usual Derek!

Question for you, would you be willing to compromise on price, given that you would have a monthly repeat customer? Say that instead of $310, you would charge half price (Given that your schedule isn’t already packed with people paying $310).
What does that say about your business?
Does that mean that you are compromising on quality (outwards speaking)?
What happens if you charge differently for different services? (like apple coming with a lower priced version..)

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Tariehk

I like your video. I think by having a higher price you will automatically raise the expectation of your client and if you can beat that users expectation then it is a win-win for everyone. I feel when you first start off it is good to come to the market at market price, because since you are beginning you do not want to come too low because people will think your product / service is not good, but as you stay around and improve your product, you should increase your price and do not be afraid to do it. Most people are afraid to do it, but you should always try and if all else fails just go back to the lower price.

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Melanie

Derek,

I tell you, your videos are awesome and always inspire me. I just told a friend about you and sent her the link to your Facebook and Website. I love how you just tell it the way it is and there is no BS. Thanks for all the hard work and most importantly the education you provide!

Melanie

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Janice

I stayed at the Turtle Bay hotel on Oahu. It had beautiful robes, towels and mugs in the room and if you wanted to take it home with you, they would just charge your room. It had a swim up bar and it’s own exclusive surf break that no one outside of the hotel was allowed to access so there was lots of room. We used their tennis courts, which ignited a passion for the game and when we got back home, we got all our friends interested in taking up tennis with us.

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Darko

So finally I have the the time see even this video and it’s great value as always. One question: how about some price discrimination, could the guy also offer slightly less time consuming service and charge like $100 for that? Theoretically it could give him new revenue stream without hurting the brand and keeping those high-end service customers where they are. Those new low-end-service customers will at some point want to upgrade and see how it feels to get (and pay for) $310-haircut as well. (I came to think of what Uber is doing with their new UberX service in Stockholm = “cheap & green” black car)

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Miriam Ortiz y Pino

I once spent $275 on sale! on a Betsy Johnson skirt at a time I usually spent around $40. That skirt was the only one that had fit in a week of trying on. It lasted me over 15 years, I wore it at least once a week that whole time. It had a forgiving fit, classic style and great construction.

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Xu Vicky

You’ve got one interesting point there. But $310 for a haircut is way expensive than the average one. I know you can get one good haircut for a cheaper price. But then, sometimes we do splurge on things we think that are worth it.

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Nina Solomatina

Hey Derek,

amazing tips!! Really cool that you find and break down all these learning points from a single experience!!

Super liked what you had to say about it – actually so much liked the name of his shop, I’m now thinking of naming my own company Graduate Admissions Studio (sounds good, no?))

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Jeff Goins

One of the few things I splurge on is food. Once in a while, my wife and I will go out for dinner and just really treat ourselves. The major difference isn’t just in the quality of food (that would be too obvious); it’s in the level of service you get. And the little things make a difference, like when the waiter of a restaurant gave us a sample of something delicious that wasn’t even on the menu, just because it was our first time there.

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Nick Hall

Great advice as always. I’ve found that just having the brass balls to ask for more money means you’re quite likely to get it. The ones that baulk at the higher rate are probably the clients that were going to be nightmares anyway.

Truthfully I have worked at both ends of the price spectrum, trying to provide volume work at a cheap price and quality at the top end. The top end is where you have to be in a service industry if you want to stay sane and retain some self-respect.

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Jim Buckley

I’ve always maintained a man should spend a lot on haircuts. You wear it on top of your head every day of your life. The same with sunglasses. Also if you can’t tell the difference between a $10 haircut and a $310 haircut thats all the more reason to spend the extra money. Leave it in the hands of people like Jordan Blackmore who have a real passion for it. All you have to do is look good afterward

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Anneke van Aswegen

What a great USP this Hair Studio has. Creating a unique haircut experience and filling knowledge gaps you didn’t even know you had. . . fantastic marketing.

“I laughed when they said a $310 haircut — But when they brought the robe!”

Enjoyed your video. Keep it up.

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Charles Gaudet

Fantastic video! In fact, that’s the way I felt when I left my $20 barber to see my $48 “Hair Stylist”…

Curious though, will you be going back for another $310 haircut? If not, what more would they have to do to earn your business on a regular basis?

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Paththage

CRazy awesome tips. I remember how I sold this client who just wanted website, and fully integrated responsive website with Additional mobile app for the price for a additional £600.

Btw the most expensive hair cut I’ve taken in London is £30 and that was pretty good. Anyway thanks for the great tips and really enjoyed the vibe you produce those videos.

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Teej

Sooooo any chance of captioning your video so us Deaf business owners can know what you’re saying?

Thanks!

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David

This is a great example and a great story. Many people hearing this will say, “but I could never do that…”. As a branding expert, I’d say, “Maybe not yet, but no matter where you are now you can set you sights higher by starting today, offering a little bit more value than your competition or just more than your customer expects. Buy large shoes and you’ll grow into them!

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Ivan Widjaya

That’s $310 for that haircut? Kidding aside. People really need to know to charge higher for their services especially if they can really do a good job. Confidence then becomes a very important factor.

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Donia

I came here directly from your guest appearance on Lewis Howes’ podcast and this was the first article I clicked because I have been trying to get this point across to my boyfriend for over a year: he is, without exaggerating, probably the best personal trainer where we live for what he does (corrective exercise — helping people move properly, prevent injury, and get out of pain — he’s actually helped people walk again who were restricted to mobility carts for pete’s sake!!) And yet he insists on charging the lowest he can possibly afford AND drives to his clients’ homes!

It drives me crazy because he’s not only worth so much more, his clients have private jets and can afford so much more!! But he’s new to the whole self-employed thing and I think part of the problem is that he probably still thinks like a wage-earner. Which is sad because someone new just arrived on the island and is marketing himself as the “#1 Trainer” here and charging much more, which means people will probably believe the hype, regardless of the facts.

Anyway, sorry for the rant mixed with praise, but if you ever come to Kauai I’d love it if you could come give him a good kick in the pants :-) Your info on Lewis’ site was truly fascinating and I look forward to discovering more of your insights here!

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David Kenward - The Mental Coach

Donia, it can be really tough moving from wage-earner mindset to self-employed mindset, ESPECIALLY in a healing profession. Your boyfriend obviously loves helping people improve the quality of their lives, and there’s got to be a balance between charging based on the value of what you provide AND feeling OK about it. A lot of this has to do with our attitudes and beliefs about money.

I had to get past this, myself. I work with clients with some pretty serious health issues, including chronic and intractable pain AND I want to make a good living doing it. I suggest he sit down and write out what he wants out of life – emotional and material, then where he’d like to be one – five years from now. That’s a good blueprint to start. Good luck and let me know how it goes. We need healers to keep doing their work, not give it up because they’ve gone broke!

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Jordan Owen

Derek,

You missed one point :) Jordan is calling Artist….instead of a regular name “barber”. Also, experience is the most important thing in the business. You had given me a creative idea today to implement it in my business. My customer surely would have a much better experience from tomorrow….

Side note: Nice hair cut!

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Krista

Last year I invested in a program to help me lose weight and gain energy, it was the best investment I have made, and am down 33 lbs for 8 mos now, and i feel like a million bucks….the products are worth every dime, and once I took a look at my spend each month it actually saved me a few bucks!

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Laurie

Hi Dereck
First of all I totally enjoy listening to your videos. You are excited about what you are telling people and the enthusiam is contagious! I would love to be able to attend a lecture with you!
I have a travel agaency in a small town, and the biggest obstacle I have is justifying charging fees. I am a professional and so are all my agents, AND I demand great service from myself and my agents, and we are very professional and friendly, AND we keep up on taking travel courses, conferences, webinars and everything else to keep up to date with anything travel related. I have started implementing some charges, but its difficult. But after listening to this video I think I can take it to the next step. Becasue I believe we deserve that service fee. Thank you for your help!

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Sarah Walker

There have been numerous occasions where I’ll one product over another for no other reason than its price. We automatically assume that more expensive equals better quality. Sometimes I’m wrong … but mostly right.

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Paul

Derek, watched some of your 2012 vids. That $310 haircut was certainly worth it.

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Garrett

My experience isn’t necessarily about price but rather being the expert in your niche through raising the bar above the industry standard.

When I lived out west, In-N-Out was the only cheeseburger I’d eat. For one, they only made cheeseburgers; no chicken, no salads, no fancy wraps. So that alone raised my confidence in their ability to make an outstanding cheeseburger.

They had windows along the drive-thru that allowed you to see them cooking your meal. That proved to me that they’re proud of how they cook their food.

And to top it off, literally, the burger I ended up with always looked like the burger they advertised. It was juicy, plump, not smooshed to bits, and filled the car with an aroma I wish I had as an air freshener.

So for those reasons, In-N-Out will forever be my burger of choice.

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Julie Brett

I once bought a pair of skinny jeans that were $320. It was just before skinny jeans became the norm. I used to buy jeans for $20… and honestly, I do again now. I wore those jeans almost every single day for a year to make sure I got good use out of them. I wore the knees out completely and then cut them off and used them as shorts. I still paid over $1 a day for them. Nuts. I think it turned me off spending too much on things. I think it’s more appropriate, not to charge a high amount, but to value what you are selling correctly. That guy wasn’t just a barber in a barber shop, he was a runway stylist. He CAN ask for more because he has more skill. You can’t just say “Yeah, I’m a creative director” when you don’t really know what you’re doing. You have to earn it. If you oversell yourself people will lose trust in you very quickly.

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Frederik

nice article Derek. i think price reflect the quality. when i was a newbie i charged lower price in order to capture the market. after building my own brand name i’ve been starting to charge higher price since i have faith on my work and its quality so did my customers. that is why they paid x amount of money for their job without any hesitation. i have never let them down. it was a win- win situation for both of us.

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Adrian Farr

Thanks for the video. I am in the process of launching a high-end photography brand as a second photography business for me, and my prices are set a lot higher than most in my area, but what I am offering is so much more. My goal is to make the experience as luxurious as possible; difficult to do when starting out, especially with a tight budget and few contacts but there are definitely some things I can take away from this video; Such as the realisation that I do not need to justify myself to everyone, as long as I can deliver the results to those who matter. So thank you.

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Meagan

I think the biggest part is that you have to believe in your price, when you do the right people will buy it. I have people tell me all the time ‘I’m not paying that when I can buy it for this much less over there’ fine, why are you wasting my time, just say no thanks and keep walking…….I had one guy upset I was trying to rip him off charging him $500 for a pig, I told him that was what I knew she was worth and if he wanted one cheaper than go get it from down the way–he called back a week later to again tell me how outrageous the price was, I simply told him I was too busy and not going to discuss the matter with him again

the point is, when you believe in the value of your product people can either pay it or not, don’t let them belittle you to come down, you aren’t doing yourself any favors–be steadfast in your pricing, the right people will come along (Just FYI, I sell soap that rages in price from $5-30 a bar……yes, occassional we clearance our inventory, but do you really think I buy into the ‘this is too expensive I can get it for $1 at walmart’–nope)

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